RELAUNCHES: Fairy-tale ending for Storybook

What are the chances of survival for a catalog whose corporate parent filed Chapter 11, stopped mailing catalogs for six months, and owed more than $1.2 million to customers for undelivered merchandise?

Not great, but Foster City, CA-based Storybook Heirlooms has beaten the odds. After its parent company, Fulcrum Direct, shut down all seven of its titles in July 1998, the cataloger of girls’ apparel is back and operating as a wholly owned subsidiary of New York-based teen marketer Delia’s.

At its height in early 1997, Storybook was a $33 million business with an 8% pretax profit, according to president Estelle DeMuesy. Then in June 1997, Rio Rancho, NM-based holding company Fulcrum Direct bought the cataloger. Unfortunately, Fulcrum’s strategy of acquiring a stable of children’s catalogs, including Playclothes and After the Stork, proved ill-fated. Just 13 months after buying Storybook Heirlooms, Fulcrum Direct was out of business.

Enter Delia’s, whose properties include the namesake catalog and the iTurf Website of teen merchandise. In September 1998, Delia’s acquired the assets of Fulcrum for $4.75 million.

“We bought Fulcrum almost solely for the [5 million customer] names,” says Delia’s president Evan Guillemin. “We wanted the database to act as a feeder system to Delia’s.” Except for its Zoe teen catalog, Fulcrum’s titles targeted infants to preteens; once the youngsters outgrew the Fulcrum books, they’d be the target market for Delia’s. “But we discovered that Storybook has a vibrant business,” Guillemin adds, referring to its loyal customer base.

By January 1999, Storybook was back in mailboxes. Relaunching the troubled title wasn’t easy, however. For one, Fulcrum owed Storybook customers more than $1.2 million. “We tried to make good through gift certificates and refunds,” DeMuesy says. Also, vendors still owed money by Fulcrum were leery of extending credit. But Delia’s deep pockets helped Storybook reestablish credit limits.

Now Storybook hopes to live happily ever after. As of October, it had 606,286 buyers in its house file, near its all-time high. Its 69,671 six-month buyers spent an average of $120 an order. “We’ll make a fair amount of money this year,” DeMuesy says, “and 4%-5% profit pretax.”